Why Government Fails to Adopt Painless Solutions to the Nation’s Problems

The conventional wisdom is that the nation faces difficult economic choices, and that we cannot make progress on our collective challenges without imposing losses on someone. But in a provocative New York Times column, Cornell University economist Robert H. Frank argues that many important problems can be solved “without requiring painful sacrifices from anyone.”

Frank gives the example of highway congestion. Roads are crowded because they are generally free. Yet many Americans would gladly pay to avoid horrendous traffic delays. As Frank points out “A modest congestion fee, administered with E-ZPass-style technology, would raise needed revenue and provide an incentive to use crowded roads only when the benefits outweigh the social costs.” The congestion fee would be a burden for low-income households. But, Frank suggests, “because the gains far exceed their price, we can redistribute them so that everyone comes out ahead.” The more general point is that there are many potential reforms where the winners could compensate the losers and still be better off. Yet such “painless” solutions often fail to generate political support. Why not? Frank observes that the reforms may upset some ideologues and lobbyists, but that is at best a partial explanation.

Several years ago, Yale political scientist Alan Gerber and I invited leading scholars to contribute to an edited volume (Promoting the General Welfare: New Perspectives on Government Performance) on the failure of government as an institution to solve collective problems. Factors that our colleagues nominated for consideration included: the tendency of political competition by cohesive, differentiated parties to raise the political stakes in policy debates and inhibit the search for pragmatic solutions (Morris Fiorina); the failure of the federal system to function as a true “laboratory of democracy” that develops and spreads effective policy innovations across jurisdictions (Mark Rom); the failure to devise congressional rules and procedures that encourage the adoption of socially efficient laws (Sarah Binder); the elimination of analytic research bureaus like the Office of Technology Assessment (Eugene Bardach); and the tendency for electoral incentives to detour lawmakers “into small-bore distributive politics and feckless position taking” (David Mayhew).

To this list of factors, Gerber and I added another: developing novel solutions to promote the public good can be politically risky, because it requires a policy innovator to shift public opinion. This effort at persuasion is akin to making a risky investment, which can generate rewards for the investor or go sour. In a commercial setting, such an investment often enjoys legal protections such as patents and trademarks. But in politics, there is nothing to stop an opportunistic opponent who observes the changes in public opinion produced by his political rival’s effort to build support for a new policy from developing a similar proposal of his own. If this copy-cat behavior is successful, the policy innovator will, at best, capture a small share of the credit for the result of his efforts, reducing the incentive to develop the policy innovation in the first place.

Gerber and I coined the phrase “Zero Credit Policymaking” to capture this political failure. As we wrote, “If problem solving is an unintended by-product of political competition rather than something pursued for its own sake, and if politicians are motivated to do what wins elections, a tension exists in our system of collective choice. From the standpoint of social welfare, a policy should be adopted if the benefits are greater than the costs, whereas from the standpoint of a politician, a policy should be adopted if the political benefits to the politician are greater than the political costs. Good policies that have large social but small political benefits may not find a political sponsor.”

Can anything be done? Focusing on Congress’s role, Yale University political scientist David Mayhew came up with a thoughtful list of reforms: streamline legislation (no more 1,000 page omnibus bills!) to help citizens better understand what their government is doing; open up congressional primaries to all voters regardless of party; encourage members to raise at least half their campaign contributions in their states or districts; package C-SPAN coverage in small segments that voters and the media can digest; and cripple partisan gerrymandering. All good ideas to promote the general welfare, but unfortunately they have not gained much traction.

9 Responses to Why Government Fails to Adopt Painless Solutions to the Nation’s Problems

“The congestion fee would be a burden for low-income households. But, Frank suggests, “because the gains far exceed their price, we can redistribute them so that everyone comes out ahead.” “

Isn’t this an example of a painful solution, but one that should theoretically lead to better outcomes in the long term (once you get the gains and successfully “redistribute” them)?

Also, wouldn’t that really require two policies? One to introduce the congestion fees to burden the low-income households, and a second to introdue the redistribution to help the low-income households out of their burden? I could see low-income households prefer the redistribution and avoid the pain, and I could see pro-revenue groups prefer the congestion fees and avoid any redistribution that would reduce revenues.

His call for redistribution makes little sense when he’s calling for more spending in the short term over infrastructure. That has to be paid for. So much of the money raised through the congestion fees will probably be stored to pay off the spending, meaning the low-income households end up still feeling the pain.

The author’s attempts to control waste by influencing how people spend their money is also “painful”, but in a different manner.

With respect to the very well-regarded David Mayhew, I don’t see how a single one of his proposals deals with the cost-benefit profit you suggest. All those things would *raise* the cost of political risks, not lower them, because added attention and loose primaries make it easier, not harder, to be removed from office.

Yes, Mitch, but that increasing difficulty of being reelected then requires that representatives be more attentive to ALL their voters, rather than the narrow group that constitutes their primary constituency and the small group that formerly paid attention to the news cycles. Indeed, the goal is to make being reelected more difficult, and therefore to change the behavior of our representatives.

Robert Frank writing in the NYT is not an economist; he wears many hats, and his advocacy hat makes him say absurd things (this problem also occurs with Paul Krugman). Even giving him the full benefit of the doubt, best case is that we transfer a large part of the tax burden to lower income people through a VAT-like mechanism (consumption taxes are highly regressive, but it’s all for their own good, I’m sure) and shove the rest into the future. It’s more of a thoughtless solution than costless.

I wonder how much of the inability to pursue beneficial but novel policies has to do with two other factors:

a. Distrust that the novel policy will be enacted as promised and have the desired effect.

For example, congestion pricing roads with some EZPass like mechanism makes sense, if it’s done in a basically sensible, predictable way, and the problem of the low-income people getting a big extra unexpected cost is dealt with. But in order to support that, I have to believe it will be done in a sensible, predictable way. I have to believe that, for example, the rates will be more-or-less comprehensible, so I don’t drive downtown and get a cellphone bill type experience, where I find out that because I didn’t understand the complicated rules for billing, I got some huge extra charge. I have to believe that the rates won’t be unpredictably changed in ways that mess up my long-term planning–we have a county budget crisis, and suddenly my commuting costs triple and my budget is messed up.

b. Complexity of explanation or ease of attacking the policy.

Explaining congestion pricing isn’t all that hard, but I can see some relatively easy attacks on it (“they want to take our public roads and turn them into toll roads”), whereas you have to have some notion of market mechanisms and supply and demand to get the arguments in favor of it. I think there are a lot of good policies that are hard to justify or easy to attack, and bad policies that are easy to justify or hard to attack. (Good policies are probably somewhat easier to argue for, but not all that much easier than bad policies to argue for.) An easy example of this is when the country is riled up and ready to go to war–any opposition to the war is likely to get you smeared as unpatriotic, weak, or treasonous, even if the war is a really bad idea. In this case, the rhetorical attack works about as well when the war is a good idea as when it’s a bad idea.

1) There is no point “encouraging” Congressmen to do x, y, or z with their campaigns. They will act in their own interests and ignore you. You may as well just cut to the chase and encourage poor people not to drive and rich people to give them money–not gonna happen.

2) As you say a lot of these win-win proposals take the form of “do something with big losers and slightly bigger winners, and compensate the losers with cash”, with the compensation being structurally completely separate from the main proposal. This is a very common theme in economics. However in politics/society it is basically unprecedented. The idea of sending out a general cash payment is also nearly unprecedented (outside Alaska)–and I note that often people making these proposals actually find ways to avoid making the payment in cash (going for tax credits or somesuch instead). Sending out “citizen’s dividend” or “sales tax rebate” type checks just doesn’t seem to be accepted as a conventional part of public policy. I think that it is partly because it seems a bit “dirty” to the rich and middle class to mollify people by explicitly paying them, and to the poor who would take the cash it maybe feels a bit inappropriate too, while simultaneously highlighting that they are lower class. And it also feels somehow wrong because it is an unconventional policy. I bet that if a high profile measure of that type ever does get enacted, it will pave the way and suddenly these proposals will become more common.

There is also the obvious complaint that people bring up for this type of thing–maybe it’s covered by one of the people mentioned in the OP: The policy will get enacted–forcing poor people off the roads, stop using air conditioning, undermining union manufacturing, whatever–but the compensating dividend/tax credit will be left out. Or it will be cut in the next budget crunch. Or the extra money–for which they gave up their access–will become an excuse to never give poor people any other benefits or credits. And of course a twofold proposal is harder to explain, and many voters will simply fail to understand the connection, or screw up the math (or see the truth) and think the compensation isn’t adequate.

In fact many of the common sense proposals, which are win-win if appropriate compensation is paid, end up getting passed without the compensation. It is actually easier to pass measures *without* mollifying the (poor) losers, perhaps because the rich object to the payoff (as I say above) and only the rich/upper middle class’s views get considered. You can see this with London’s congestion pricing–your same proposal, but without the compensation. You can see it with the cap and trade bill the House passed: many people proposed a fixed “rebate” to compensate individuals for the inevitable raise in electricity bills it would cause, but (unless I misremember?) that did not make it in–and it certainly wasn’t because Pelosi hates the poor.